New push to collect tax from vacation rentals San Francisco is going to court to force HomeAway to provide information on its hundreds of local short-term rentals. The goal is to ensure that landlords are ponying up the city’s 14 percent hotel tax whenev
the taxes owed to the city,” Herrera said. “Unfortunately (HomeAway) has taken a very obstinate view and said he doesn’t have the power.”
Travel giant Expedia purchased HomeAway in November for $3.9 billion, creating the world’s largest booking site with more than 1.5 million hotel room and vacation rentals. HomeAway’s main rival for the business of turning homes into hotels is San Francisco’s Airbnb. Although it’s a newer company with roughly the same number of listings as HomeAway, Airbnb’s rapid growth has pushed its valuation on the private market to $25.5 billion.
Airbnb, which handles all transactions between its hosts and guests, has collected hotel tax from its San Francisco guests since October 2014. It also paid an undisclosed amount of back taxes. It says its guests pay the city about $1 million a month. It now remits hotel taxes in 190 jurisdictions worldwide, and often points to this during its battles with regulators as an example of its efforts to be a good corporate citizen — although a tin-eared busstop ad campaign in October highlighting its San Francisco taxes backfired.
Last year, Cisneros’ office designated Airbnb a “qualified website company,” streamlining its hosts’ obligations because Airbnb provides detailed information on each host’s rental history along with the tax remittances. By law, the tax collector keeps that information confidential.
Besides the hotel tax, San Francisco imposes two other requirements on vacation-rental hosts, both of which are widely ignored. All hosts are supposed to apply for a business registration certification from the treasurer. They are also supposed to apply to the Office of Short-Term Rental Administration and Enforcement for a registration number. Out of many thousands of hosts, by March only about 1,500 hosts had the certificate, while only 1,647 had registered, the city said.
HomeAway and its VRBO subsidiary each have about 1,770 listings in San Francisco, according to a city report. The same listings appear on both sites. Airbnb says its has 9,448 listings from 7,046 hosts. FlipKey, which is owned by TripAdvisor, has 896 listings.
TripAdvisor said FlipKey meets San Francisco’s tax requirements. “From the date that the current San Francisco short-term rental regulations came into effect (Feb. 2015), we have collected and remitted taxes on behalf of San Francisco owners who advertise on our platform,” said Laurel Greatrix, a spokeswoman for TripAdvisor, in an email. However, the treasurer’s office noted that only one company, Airbnb, has received the qualified website designation showing that it is in complete compliance.
HomeAway has had a contentious relationship with San Francisco. It sued the city in 2014 over the short-term rental ordinance, saying the law was crafted to fit the way Airbnb did business and thus discriminated against HomeAway. The lawsuit challenged the hotel-tax collection requirement on the grounds that HomeAway was just a classified listing service, rather than a middleman like Airbnb, and didn’t know how often properties were rented out. That case was dismissed on procedural grounds.
HomeAway has since shifted its business to assist its hosts with payment processing, so it does now have insight into rentals for more than half of its properties.
Carl Shepherd, cofounder and former chief development officer, who is no longer with HomeAway, told The Chronicle last year that “the vast majority” of HomeAway’s listings break San Francisco law because they are not residents’ primary homes, as mandated under the short-term rental ordinance. But that wasn’t a problem, he said, because the law itself abets scofflaws.
“The new law tells you exactly how to skirt it,” he said. “All you have to do is say you live there 270 days a year. You do have to lie and you do have to obfuscate. But the city is at a distinct disadvantage because they can’t catch this.”